House Speaker Nancy Pelosi and President Joe Biden.
Bill Clark/CQ-Roll Call Inc. via Getty Images; Michael M. Santiago/Getty Images
Democrats still need to resolve key differences on Biden’s latest social spending framework release Thursday.
Some lawmakers are pushing to include drug price controls and a paid leave program.
“There’s still a lot of stuff to do,” Sen. Tim Kaine said.
President Joe Biden tried breaking the Capitol Hill logjam on his economic agenda with a new $1.75 trillion social spending plan. But lingering divides on which measures to prioritize in the slimmed-down package spells more wrangling in the weeks ahead.
Democrats are signaling the blueprint will undergo major changes in what may be another month of negotiations. Sen. Tim Kaine of Virginia said he believed drafting a bill that clears the 50-50 Senate and passing it could happen sometime before Thanksgiving.
“I would say it’s close to final, but there’s still a lot of stuff to do,” Kaine told Insider on Thursday. “It’s just that it is a very massive bill.”
The spending framework would set up universal pre-K for six years, renew monthly cash payments to the vast majority of American families for another year, expand Medicare so it covers hearing, transition the US onto cleaner energy sources and provide child-care subsidies for six years.
The biggest chunk of the plan is devoted to tackling the climate emergency. It largely consists of tax credits for clean energy manufacturing and addressing extreme weather events. The blueprint is paid for with tax hikes on rich Americans and large corporations.
Most Democrats in both the House and Senate support it. But a pair of holdouts, Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, aren’t committed to backing it yet. Every Senate Democrat must stick together for it to pass the upper chamber.
The pair’s lukewarm statements on the framework caused progressives to keep holding back support from a separate $550 billion infrastructure bill focused on repairing roads and bridges. Speaker Nancy Pelosi pulled the vote on Thursday for the second time in less than a month and it’s been stuck in the House since it passed the Senate in August.
Dissatisfaction among centrists who want the infrastructure bill immediately sent to Biden’s desk is growing. “People are frustrated right now,” Rep. Jim Costa of California told Insider. “There’s a lack of trust, and you got a lot of members that have been here four years or less and they don’t seem to understand how you get things done.”
Pelosi held out the possibility of passing both bills next week. But some lawmakers are pushing to include measures like federal drug price controls, paid leave, and a repeal of the federal deduction for state and local taxes known as SALT, all of which were dropped from Biden’s plan.
It’s also possible another version of a billionaire tax proposal that lasted less than a day before being killed by Manchin could be re-added. “This is not done,” Senate Finance chair Ron Wyden of Oregon told Insider.
U.S. Speaker of the House Rep. Nancy Pelosi (D-CA).
Alex Wong/Getty Images
Nancy Pelosi pulled a vote on the infrastructure bill amid progressive opposition.
Biden unveiled a $1.75 trillion social-spending framework on Thursday, cutting many proposals.
Progressives are adamant they will not vote for infrastructure until they approve of the social-spending reconciliation bill.
House Speaker Nancy Pelosi pulled the plug on a vote for President Joe Biden’s $550 billion infrastructure bill for the second time in a month, as scores of progressives refused to back it without a larger $1.75 trillion social spending bill clearing the Senate.
It capped a frenzied week of activity on Capitol Hill that saw Democrats leave Biden empty-handed as he traveled abroad for a major climate summit in Scotland. The president hoped he could tout domestic achievements back home to demonstrate America was serious about fighting the climate emergency.
For weeks, Democratic leaders tried securing an agreement on a skinny social spending plan containing the bulk of Biden’s agenda with Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, a pair of centrist holdouts. It led the party to dramatically curtail their economic ambitions to earn their critical votes, jettisoning provisions like paid leave and tuition-free community college from the package.
Biden traveled to Capitol Hill to personally urge Democrats to end their squabbling and get behind the latest social spending framework unveiled on Thursday. House Democrats later released the 1,684 page bill, which economists argue will create jobs and cut costs for familes.
It would provide universal pre-K, renew monthly cash payments to the vast majority of American families for another year, expand access to healthcare, transition the US onto cleaner energy sources and provide childcare subsidies. It’s paid for with a collection of tax hikes on the rich and large firms, including a corporate minimum tax and a new surtax on multimillionaires.
“We badly need a vote on both of these measures,” Biden privately told House Democrats, per a person familiar with his remarks. “I don’t think it’s hyperbole to say that the House and Senate majorities and my presidency will be determined by what happens in the next week.”
But Biden’s pitch to dislodge the infrastructure bill landed with a thud. House progressives dug in on their position that both the infrastructure and social spending bills must be approved in tandem. They had encouragement from another pair of influential Senate counterparts: Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts.
“There is too much at stake for working families and our communities to settle for something that can be later misunderstood, amended or abandoned altogether,” Rep. Pramila Jayapal of Washington, chair of the Congressional Progressive Caucus, said in a statement. “That is why dozens of our members insist on keeping both bills linked and cannot vote only for one without until they can be voted on altogether.”
Progressive distrust of Manchin and Sinema is running high. Both did not commit to vote for Biden’s framework on Thursday. The West Virginia Democrat only told reporters he was “continuing to negotiate in good faith,” though he suggested later in the day that he could back the $1.75 trillion price tag.
Then Sinema wrote on Twitter that “significant progress” was being made on the emerging social spending bill, adding “I look forward to getting this done.”
Their comments did little to quell progressive fears that both could still sink the bill. “Everything those two do is alarming,” Rep. Ilhan Omar of Minnesota told Insider, arguing their obstruction was preventing Biden from a scoring a major win on his economic agenda.
There’s few signs that progressives will drop a blockade that began in the summer, frustrating centrists in the party who want the infrastructure bill passed immediately. “People are frustrated right now,” Rep. Jim Costa of California told Insider. “There’s a lack of trust and you got a lot of members that have been here 4 years or less and they don’t seem to understand how you get things done.”
The framework is likely to undergo changes as Democrats in both chambers press to include some of their biggest priorities like a paid leave program and prescription drug price controls. Many are still grappling with the painful sacrifices required for the social spending plan to clear threadbare majorities and become law. Sanders chiefly authored the initial $6 trillion spending proposal billed as on par with New Deal and Great Society, both endeavors that fortified the safety net and recast the relationship between Americans and the federal government.
That proposal was whittled down to $3.5 trillion in July, and now it’s been cut by half. But the price tag is likely to stay locked in as the new ceiling for Biden’s economic agenda.
Democrats are relying on a legislative maneuver known as reconciliation, allowing Democrats to approve the legislation with a simple majority vote over unanimous GOP opposition. They have little room to maneuver with only three votes to spare in the House and none in the 50-50 Senate.
Pelosi said earlier on Thursday she wanted paid leave back in the package after it was ejected due to resistance from Manchin. That may lead to several more weeks of negotiations on what’s ultimately in and out.
“The deal isn’t done until the Senate acts,” Senate Finance Committee chair Ron Wyden of Oregon, a chief advocate for government drug price negotiations, told Insider. “This is not done.”
Still, some are taking solace at the talks picking up speed. “There has been more negotiation that has happened in the last three weeks than has happened in the last many months,” Jayapal told MSNBC.
Jayapal later told Insider that progressives are backing Biden’s framework as it is, though she’d welcome “additive” changes that garner the support of all 50 Senate Democrats.
As Insider reported, the only investment that did not get cut was $555 billion for the climate – the largest investment in the bill.
Elon Musk slammed a new Democratic tax proposal that would target him, if implemented.
“Eventually, they run out of other people’s money and then they come for you,” he wrote on Twitter.
Musk could face up to $50 billion in taxes the first five years of the plan’s implementation.
Tesla founder Elon Musk on Monday evening criticized a Democratic tax proposal that would target American billionaires to fund a safety net expansion, arguing it represented the start of a new campaign from Democrats to redistribute wealth from the richest Americans.
“Eventually, they run out of other people’s money and then they come for you,” he wrote on Twitter.
In a separate tweet, Musk insisted that any government-induced reallocation of wealth would be better managed by the private sector.
“Who is best at capital allocation – government or entrepreneurs – is indeed what it comes down to,” he wrote on Twitter. “The tricksters will conflate capital allocation with consumption.”
Musk is taking aim at a proposal chiefly authored by Sen. Ron Wyden, chair of the Senate Finance Committee, which may be unveiled as soon as Wednesday. The plan is meant to levy new taxes on tradable assets like stocks held by roughly 700 billionaires to fund an expansion of healthcare, childcare, and renew President Joe Biden’s beefed-up child tax credit.
Democrats say they are moving to tilt the economic scales of wealth away from the richest people and towards the middle class after years of growing inequality. Billionaires often pay lower tax rates compared to everyone else because they build up their wealth from the increasing value of their stock and shares. Those aren’t subject to capital gains taxes until they are sold.
A new analysis conducted by economist Gabriel Zucman for The Washington Post indicated that Musk could face up to $50 billion in taxes in the first five-year stretch of the tax’s implementation.
Musk’s wealth soared on Monday. His fortune surged $36 billion in only one day after the rental car company Hertz announced it was buying 100,000 Teslas for its rental fleet, Insider’s Tim Levin reported.
Some experts say the Wyden plan could be difficult to implement, since it would set up another layer of the tax code for billionaires. Steve Rosenthal, a tax expert at the nonpartisan Tax Policy Center, wrote in a blog post that potential problems include how asset losses are treated and whether billionaires could use it to shrink their tax bills.
“We always felt that billionaires’ income tax needed to have some symmetry,” Wyden told Insider. “If you get gains there should be an appropriate opportunity for losses.”
Senate Republicans are slamming the proposal, arguing it would stifle innovation and entrepreneurship. Sen. Mitch McConnell of Kentucky, the GOP minority leader, called it a “hare-brained scheme” on Monday.
Manchin says he’s open to imposing new taxes on billionaires to cover the Democratic safety net package.
“I’m open to any type of thing that makes people pay,” Manchin told reporters on Monday.
Democrats are eyeing alternative plans after Sinema quashed corporate tax rate increases.
Sen. Joe Manchin said he was open to a nascent Democratic proposal aimed at imposing fresh annual taxes on gains in billionaires’ assets.
“I’m open to any type of thing that makes people pay,” Manchin told reporters on Monday. “So people don’t report income like you and I do, earned income, there has to be a way for them to pay their fair share.”
Manchin was referring to a new “Billionaires’ Tax” from Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee. The proposal, slated to be released in the coming days, is poised to target unrealized gains on assets such as stocks. Assets that increased in value without being sold would be taxed annually. It’s based on an proposal that has been under development since 2019. It will also reportedly allow billionaires to take deductions on their losses.
Currently, assets are taxed only when a person sells, which acts as an incentive for them to remain unsold until death and then passed on to heirs.
Democrats are eyeing the proposal as an alternative method of raising money after Sen. Kyrsten Sinema of Arizona quashed efforts to raise corporate tax rates. In a 50-50 Senate, Senate Democrats can’t lose either Manchin or Sinema, providing them with massive influence to shape what’s meant to be the centerpiece of Biden’s economic agenda. The safety net plan is meant to expand access to healthcare and childcare, renew child tax credits, and more.
Sinema’s opposition to lifting corporate tax rates all but ensures that a key part of President Donald Trump’s 2017 corporate tax cuts will survive a period of Democratic control of Congress and the White House.
Senate Minority Leader Mitch McConnell ripped the billionaire tax plan on Monday, assailing it as a “hair-brained scheme [that] would have the IRS penalizing people who invested wisely and compensating people who have invested poorly.”
President Joe Biden participates in a CNN town hall at the Baltimore Center Stage Pearlstone Theater, Thursday, Oct. 21, 2021, in Baltimore.
Evan Vucci/AP Photo
Biden pushed back against Manchin’s efforts to restrict eligibility for the child tax credit on Thursday.
The president responded “no” when asked if he backed work requirements.
Biden pitched a one-year extension of the CTC, which was slammed by Democrats for being too short.
President Joe Biden said at a CNN town hall on Thursday evening that he didn’t believe people needed to work to receive the monthly child tax credit, pushing back against a key Democrat’s effort to restrict eligibility for the cash benefit.
The president flatly responded “no” when asked if he backed a work requirement for the bulked-up child tax credit.
Biden’s comments are pushing back against Sen. Joe Manchin of West Virginia, a centrist who holds outsized influence over the future of his economic legislation in the 50-50 Senate. Manchin has pushed a work requirement for the child tax credit over the opposition of most Congressional Democrats.
Instead, they favor ensuring families who pay little or no taxes are able to get up to $300 in monthly checks depending on the child’s age. The vast majority of families earning below $150,000 are eligible for the one-year expansion, set to expire next year.
A recent analysis from the Niskanen Center indicated that at least 60% of all kids benefiting from the child tax credit would face aid cuts if Democrats adopted Manchin’s idea.
The child tax credit makes up only one part of the sprawling Democratic social spending plan. Democrats also aim to include at least four weeks of paid leave, federal subsidies so people can purchase coverage from the Affordable Care Act exchanges, and more.
Biden pitched a one-year extension of the child tax credit during meetings with Democrats at the White House on Tuesday. It triggered a backlash from senior Democrats like Rep. Rosa DeLauro of Massachusetts, House Appropriations Committee chair and Sen. Ron Wyden of Oregon, who heads the Senate Finance Committee.
“I’m gonna get longer than that,” Wyden told Insider on Tuesday. Other Democrats involved in the child tax credit negotiations argue a longer extension is necessary so it becomes a benefit program that’s impossible to dislodge like Social Security.
“I think that we’ve got to try harder,” Sen. Michael Bennet of Colorado, an architect of the measure, told Insider on Thursday morning.
Sen. Kyrsten Sinema (D-AZ) arrives to the U.S. Capitol Building for a vote on October 19, 2021 in Washington, DC.
Anna Moneymaker/Getty Images
Democrats are scrounging for new tax proposals given Sinema’s resistance to rolling back the tax cuts Trump instituted in 2017.
It may cause them to consider aggressive new taxes on billionaires, some of which haven’t been done before.
Sen. Mark Warner of Virginia told Insider it’d be a “great irony” if Democrats failed to roll back the Trump tax cuts.
Congressional Democrats are in a tough bind.
They’re scrambling to wrap up negotiations on President Joe Biden’s economic spending plans before the end of the month, a feat that appears more unlikely with every passing day. Internal divides are bogging down Senate Democrats over the size and scope of their social safety net bill to expand access to education, healthcare, and confront the climate crisis.
Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona are insistent that the price tag of the $3.5 trillion social spending plan must come down to clinch their support. Manchin said Thursday he didn’t believed a deal would be reached “anytime soon.”
Another major part of the hold-up is Sinema’s resistance to hiking tax rates on richer individuals and large corporations, a move that all but slams the brakes on Democrats’ plans to roll back President Donald Trump’s signature tax law. Democrats may be forced to abandon a central plank of their economic agenda to earn her vote in a 50-50 Senate.
Sinema’s opposition to lifting tax rates cuts at least $700 billion in revenue meant to cover priorities like an extension of the bulked-up child tax credit, Medicare and Medicaid expansion, paid leave and more. To salvage their sweeping ambitions, Democrats are floating alternatives that would hit the richest Americans even harder with a slew of new tax increases on capital gains, along with stock buybacks among others.
Howard Gleckman, a tax expert at the nonpartisan Tax Policy Center, described the dilemma facing Democrats as “an odd thing.”
“I don’t know what’s in Kyrsten Sinema’s head,” he said in an interview. “In some ways, the other proposals are a much more direct tax increase on high-income people. So if what she’s trying to do is protect the wealth of very rich people, pushing Democrats to a mark-to-market structure or even a wealth tax actually makes that harder, not easier.”
Sen. Ron Wyden of Oregon, the chairman of the tax-writing Senate Finance Committee, argued that Democrats have plenty of alternatives to choose from, including one of his own to tax capital gains. “We are ready to go now,” he told Insider.
How Democrats may sidestep Sinema and embrace new taxes on wealth
Sens. Chuck Schumer, Ron Wyden, and Bernie Sanders.
Tom Williams/CQ Roll Call
Senate Democrats can’t spare any votes in their endeavor to turn Biden’s economic plans into law over united Republican opposition. The tricky political maneuvering required to get Sinema’s vote is already infuriating the party’s progressive wing who want the package to transform the economy and alleviate inequality.
“It would be outrageous to not include something that so desperately needs to be done, that’s the most popular part of this package, that all of us ran on,” Rep. Pramila Jayapal of Washington, who chairs the Congressional Progressive Caucus, told reporters on Thursday.
But Sinema’s position is leading Democrats to dust off older ideas in search for back-ups. Chief among them is a “Billionaire’s Income Tax” that’s being authored by Wyden, which targets unrealized gains on assets. Importantly, it means assets that haven’t been sold – but whose value still went up – would be taxed annually. It’s based on an earlier proposal from 2019 and an updated version still hasn’t been released.
For the wealthy, assets are a much more sizable part of income compared to the typical worker. If you work a salaried job, you probably pay an income tax. Meanwhile, if you’re a billionaire holding profitable stocks, you’re paying a preferential tax rate if you decide to sell and won’t pay a dime until you do.
An analysis from the left-leaning Americans for Tax Fairness finds that Wyden’s proposal would apply to just .0005% of households – amounting to the wealthiest slice of Americans. Importantly, Wyden’s proposal has Biden’s blessing.
Gleckman projected the plan could raise between $500 billion to a $1 trillion in revenue depending on details like which tradable assets are taxed. But he said setting up an apparatus to carry it out is easier said than done since it’s never been implemented on a broad scale in the US.
“You would have to create a completely new structure to do this,” he said. “It’s time-consuming, and it’s complicated.”
Already, at least one Democratic senator says he’s uneasy about implementing a largely untested idea to pay for their spending plans. “I think anytime you get into stuff that’s not proven in the tax code it becomes a bit dangerous,” Sen. Jon Tester of Montana told the Wall Street Journal’s Andy Duehren.
Other measures to make up for lost revenue include stepping up IRS enforcement and an international tax overhaul, a Senate Democratic aide familiar with discussions recently told Insider. They’re also eyeing imposing taxes on companies that buy their own stock to jack up its value, benefiting shareholders.
The ‘great irony’ that Trump’s tax cuts may be here to stay
Former President Donald Trump leaves Trump Tower in Manhattan on May 18, 2021.
James Devaney/GC Images
Democrats in both the House and Senate are betting that Sinema will ultimately budge in her ongoing negotiations with the White House. The Arizona Democrat has perplexed many in her party, given her 2017 vote against the Trump tax law.
“My hope is that person will change her mind,” Sen. Mazie Hirono of Hawaii, said, referring to Sinema. “Why should billionaires pay less in taxes than you or me?”
“I’m not giving up the possibility of some rate increases,” Sen. Tim Kaine of Virginia told Insider, adding that a deal on the price tag would help settle much of the disputes among Democrats around tax increases.
But the possibility exists that swaths of the Trump tax law – which slashed the corporate tax rate to 21% from 35% and many experts say accelerated inequality – will remain untouched when all is said and done with the safety net bill, which Democrats are trying to approve relying on their first majority in over a decade.
“​​Boy, oh boy, that would be a great irony – if a Democratic president, House and Senate embraced the 2017 tax cuts,” Sen. Mark Warner of Virginia told Insider.
President Joe Biden delivers remarks on his administrations response to Hurricane Ida at the South Court Auditorium on the White House Complex on Thursday, Sept. 2, 2021.
Kent Nishimura / Los Angeles Times via Getty Images
Biden floated a one-year extension of the child tax credit at a White House meeting with Democrats on Tuesday.
His suggestion is already causing some senior Democrats in the House and Senate to call it a “big mistake.”
“I’m gonna get longer than that,” Senate Finance Committee chair Ron Wyden told Insider.
President Joe Biden pitched a one-year extension of the bulked-up child tax credit to Democrats on Tuesday, a person familiar with the matter told Insider.
Senior Democrats are disappointed; they expected the program to last much longer.
Biden met with two groups of House and Senate Democrats in an effort to broker a truce between the warring liberal and centrist factions of the party. The feud has grown acrimonious in recent weeks as centrists attempt to slam the brakes on the ambitious size and scope of the party’s $3.5 trillion social spending plan.
The one-year extension would ensure low-income families who pay little or no taxes get the money as well, the person said. But the short extension runs counter to what many Democrats seek in the social spending plan, and they view it as their best opportunity in a generation to strengthen the safety net for families.
Some Democrats are already slamming the briefer extension.
“Nobody talked about Social Security being extended for one year,” Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, told Insider. “I think that the child tax credit is on its way to setting up a new bond between children and families and the government.”
He went on: “I’m gonna get longer than that.”
A spokesperson for Sen. Michael Bennet of Colorado said the senator believes it is “crucial” for low-income families paying no taxes to tap the benefit.
“He’s going to continue pushing forthat and for an extension of the expanded child tax credit for as long as possible,” the spokesperson said in a statement to Insider.
It also prompted fierce criticism from a top House Democrat. Rep. Rosa DeLauro of Connecticut, who chairs the House Appropriations Committee, argued it would be a blunder.
“A one year extension is a very big mistake and a missed opportunity for the country,” she told reporters on Wednesday. “I will continue to press for a more enduring framework for children and families.”
Congressional Democrats are starting to make tough calls on what should be jettisoned from their $3.5 trillion social spending plan, which faces major cuts to gain support from Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona. The pair hold enormous influence in the 50-50 Senate, given Democrats can’t spare any votes in their endeavor to turn Biden’s economic plans into law in the face of united Republican opposition.
Priorities on the chopping block include tuition-free community college, which some Democrats conceded would probably be dropped on Tuesday. Biden also reportedly set $1.9 trillion as the ceiling for the cost of the social spending bill – sliced nearly in half from the original number.
Some experts are crediting the expanded child tax credit payments with helping cut the number of kids living in poverty already and allowing families to pay the bills and manage everyday expenses like buying groceries. Families with incomes below $150,000 can get up to $300 in monthly checks depending on their kid’s age.
Yet a small but potent band of centrists argue the aid should be restricted to only the poorest families. Manchin reportedly floated a $60,000 income cap for families to qualify for the child tax credit. That triggered criticism from Democrats earlier this week because it would prompt steep cuts to many kids benefiting from government aid.
House Democrats introduced an extension through 2025 at a cost of $556 billion. Shortening its extension allows Democrats to cram more social priorities in their social spending plan, and potentially broaden its ability to clear thin majorities in both the House and Senate.
Other Senate Democrats indicated that the child tax credit renewal was still up for grabs in the talks. “It’s all negotiable,” Sen. Jon Tester of Montana told Insider.
“I support making it permanent,” Sen. Dick Durbin of Illinois, the second-ranked Senate Democrat, told Insider on Wednesday.
Sen. Joe Manchin, D-W.Va., speaks at a news conference outside of his office on Capitol Hill in Washington, Wednesday, Oct. 6, 2021.
AP Photo/Andrew Harnik
Sen. Joe Manchin wants the child tax credit to cap family income around $60,000, sources told Axios.
Manchin supported the credit under the American Rescue Plan in March with no work requirement.
The first child tax credit payment lifted around 3 million children out of poverty, one study found.
As Democrats continue to negotiate over their marquee social spending package, Sen. Joe Manchin of West Virginia is digging in on child tax credit, demanding a work requirement and a family income cap around $60,000, sources told Axios.
The credit was initially expanded for a year under President Joe Biden’s American Rescue Plan in March, with Manchin’s support and no work requirement. Under the measure, most families are eligible for monthly payments of $250 or $300 per child. Single-parent and two-parent families who made up to $112,500 and $150,000 respectively were eligible for the full credit under the plan.
Manchin’s income cap proposal would cut the number of families who qualify for the federal cash, fulfilling one of his key priorities to restrict eligibility for fresh government assistance to lower-income households.
A strong majority of Congressional Democrats are lobbying to make the child tax credit permanent as it helps millions of families pay for basic necessities like housing, health care, child care, and education.
A Columbia University study from August found that, under the American Rescue Plan, the first child tax credit payment in July lifted approximately 3 million children out of poverty.
Still, Manchin argues that without a work requirement attached to the credit, our society and economy will develop an “entitlement mentality.” In September, he told CNN’s Dana Bash that tying the credit to parents with jobs would ensure assistance was provided to “the right people.”
An analysis released last week by researchers from the Center on Poverty and Social Policy at Columbia University, Barnard College, and Bocconi University found the credit had “statistically insignificant impacts” on job seeking and workforce participation.
The child tax credit program is just one of the policies facing cuts in the proposed $3.5 trillion social spending bill as Democrats in Congress try to win over centrists like Manchin and Sen. Kyrsten Sinema, Insider’s Joseph Zeballos-Roig reported.
House Democrats are eyeing renewing the revamped child tax credit until 2025, maintaining the bulked-up benefit for four more years and locking in the credit’s ability to be issued as monthly payments to the vast majority of American families. Previously, the credit’s structure barred families with low or no tax bills from tapping into the full amount.
It has a price tag of $556 billion, or a quarter of a potentially $2 trillion sum that Biden pitched as a compromise last month. To cut corners and save on cost, Senate Democrats are weighing a shorter extension until 2024.
Sen. Joe Manchin, D-W.Va., speaks at a news conference outside of his office on Capitol Hill in Washington, Wednesday, Oct. 6, 2021.
AP Photo/Andrew Harnik
Sen. Joe Manchin wants the child tax credit to cap family income around $60,000, sources told Axios.
Manchin supported the credit under the American Rescue Plan in March with no work requirement.
The first child tax credit payment lifted around 3 million children out of poverty, one study found.
As Democrats continue to negotiate over the reconciliation bill, Sen. Joe Manchin of West Virginia has made firm demands regarding the child tax credit, including a work requirement and a family income cap around $60,000, sources told Axios.
The credit was initially expanded under the American Rescue Plan in March, with Manchin’s support and no work requirement, and provided most families with monthly payments of $250 or $300 per child. Single-parent and two-parent families who made up to $112,500 and $150,000 respectively were eligible for the full credit under the plan.
Manchin’s income cap proposal would significantly lower the amount families could bring home and still qualify for the credit.
A strong majority of Congressional Democrats have lobbied to make the child tax credit permanent as it helps millions of families pay for basic necessities like housing, health care, child care, and education.
A Columbia University study from August found that, under the American Rescue Plan, the first child tax credit payment in July lifted approximately 3 million children out of poverty.
Still, Manchin argues that without a work requirement attached to the credit, our society and economy will develop an “entitlement mentality.” In September, he told CNN’s Dana Bash that tying the credit to parents with jobs would ensure assistance was provided to “the right people.”
An analysis released last week by researchers from the Center on Poverty and Social Policy at Columbia University, Barnard College, and Bocconi University found the credit had “statistically insignificant impacts” on job seeking and workforce participation.
The child tax credit program is just one of the policies facing cuts in the proposed $3.5 trillion social spending bill as Democrats in Congress try to win over centrists like Manchin and Sen. Kyrsten Sinema, Insider’s Joseph Zeballos-Roig reported.
President Joe Biden speaks during a visit to the Capitol Child Development Center, Friday, Oct. 15, 2021, in Hartford, Conn.
AP Photo/Evan Vucci
Biden publicly acknowledged that his $3.5 trillion social spending bill will need to be cut.
“We’ll get less than that, but we’re going to get it,” he said.
He also appeared to suggest some measures like tuition-free community college could be dropped.
President Joe Biden conceded on Friday that Congressional Democrats weren’t going to get the full $3.5 trillion social spending bill that was outlined earlier this summer, the first time he’s publicly acknowledged the price tag needed to be cut in the face of resistance from a small but potent group of centrists in his party.
“I’m convinced we’re going to get it done. We’re not going to get $3.5 trillion,” he said at a speech at a childcare center in Hartford, Connecticut. “We’ll get less than that, but we’re going to get it, and we’re going to come back and get the rest.”
Biden also appeared to suggest some measures in the safety-net bill could be dropped entirely. “I don’t know if I can get it done, but I’ve also proposed two years of free community college,” he said.
The president’s remarks illustrate the tenuous state of the negotiations between Democrats and Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona on their safety net bill. It includes childcare subsidies, new Medicare benefits, Medicaid expansion a revamped child tax credit, affordable housing and more. All are on the chopping block with Democrats struggling to resolve major differences on the scale of tax increases and which priorities to fund.
Many Democrats are growing frustrated with the pair since they want to approve the legislation as quickly as possible so new federal benefits get out the door quickly ahead of next year’s midterms. But negotiations are stalling out, partly over Sinema’s resistance to lifting tax rates for individuals and large businesses.
The party is pushing the spending plan through a process known as reconciliation. That allows Democrats to approve it with a simple majority and skirt unified GOP opposition. But Democrats need both Manchin’s and Sinema’s votes for the plan to clear the 50-50 Senate, making unanimity in the upper chamber imperative to their success.
Biden appeared to suggest that another reconciliation bill could be in the cards, a possibility some House Democrats haven’t been ruling out for next year. The White House didn’t immediately respond to Insider’s request for comment.
